Toronto Real Estate Forecast 2018 – 2019

06 Feb Toronto Real Estate Forecast 2018 – 2019

Toronto Real Estate Market Forecast/Update 2018

Feb 6, 2018. The latest TREB reports shows what we all know, that Toronto housing market shrank 18% in December and now a further 22% in January. The Toronto Real Estate Board forecasts a further drop in sales volume and revenue in 2018. It’s a sad situation for an economy that should be roaring.

TREB reiterated its belief in the role of housing and real estate sales in its yearly report and believe housing sales will return during 2018.

On average, each residential transaction reported through TREB’s MLS® System in the GTA generates $68,275 in spin-off expenditures, … The real estate industry is a key contributor to our economy, with total annual spin-off expenditures close to $7 billion.

They went further to hint that without real estate sales and the taxes it generates, the government will have to get their tax money elsewhere! Voters may not want to hear that. Millennials who can’t buy a home will become furious.

The January 2018 sales results and higher prices combined suggests affordability is worsening despite government meddling in the housing market.

Toronto Forecast for 2018

What’s the Toronto Real Estate forecast for 2018? A gloomy winter/spring followed by lots of sunshine in June. Why so optimistic against all the negative reports coming out? None of them are accounting for the upcoming election in Ontario. Will the Conservatives and their new leader wipe out Wynne’s horrible repressive measures?

This chart from TREB shows the damage for yet another month:

The market seems very quiet right now, and as Benjamin Tal, CIBC’s chief economist says, “This is the most significant test the market has seen in recent years.”

Is this the best time to buy a house in Toronto? The answer to that may be yes. Prices may plummet further in February and March only to begin a strong rise in April. Why? The election in 4 months and the NAFTA fears will have abated.

Selling your home in 2018? Should you sell your home and upgrade to a roomier one? Or perhaps you’ll be downsizing to a condo? Condo sales boomed in 2017 and you’ll be competing hard for anything under $600k. Your Realtor will likely have to work a sophisticated marketing strategy to help you get your house sold and get you moved into a better one.

Is it a good time to buy a condo apartment in Toronto? Which are the best neighborhoods to buy one? Check the Toronto condo market page for insight.

If you’re looking solely for home prices, then see the detailed running home price stats for each town and district. This post has a collection of videos, opinion, stats, charts, of historic sales/prices and current stats to help you with the decision of whether to buy or sell.

The most meaningful Toronto housing market prediction: After a short depressed period this spring, there will be a fast growing increase lead by optimism with the new incoming Ontario government in July. The prediction is that the optimism of the new government will keep buyers and sellers optimistic until July.

With immigration high (300k new Canadians each year), migrants from other parts of Canada increasing, birth rates up, and Ontarian’s expectations optimistic, 2018, 2019 and 2020 will see strong demand for most properties. As you can see in the Toronto market stats below, some towns and districts in the GTA have seen very strong price growth.

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Anyone buying or selling should have the best overview of factors.

Teranet Home Prices

Teranet released its market report on home prices in Toronto, Vancouver, Calgary and other Canadian cities and predictably we saw the final burst of buying before the stress test rules came into play.

Toronto Real Estate December Report

What happened in December 2017: listings up 50% but sales down despite the last minute stress test frenzy. New housing starts dropped by 33,000 overall in Ontario in December, after a record amount built in November. Condo apartments and townhouses are all the rage, due to the almost affordable prices.

This recent chart from TREB shown below, reveals prices are still up year over year.

In December, the MLS® Home Price Index (HPI) Composite Benchmark was up by 7.2% over last year, and the overall average selling price was up by 0.7% year over year. — from TREB report.

Check out the Vancouver and Calgary forecasts too as it reflects on Toronto (And Share on Facebook!).

You Can’t be Serious! a Housing Boom in Toronto in 2018/2019? Royal Lepage predicts prices will rise 6.8% or $57,000. Only Las Vegas Nevada is forecast to be higher. With new homes sold and new development halted, supply won’t be sufficient in late 2018 or 2019. Speculators will love that scenario.

Royal Lepage predicts continued price rises even as domestic investors shift to apartments and condos.

Condo Prices Rose 23%

And the danger in the condo market might be the depressing effect of rental controls on new condo builds. As supply dwindles, prices and rents will rise which is positive for condo investors. The average rental price for a 3 bedroom condo in Toronto is now $3461 per month.

Condo prices were up 21% year over year in December.

Detached Home Prices in many Treb districts has plummeted from 18 months. In some cases, prices are down almost 50% as you can see in the charts below.

1 Million New Immigrants Will Affect Toronto’s Housing Market Demand

Demand is never ending, in fact PM Justin Trudeau just announced a program to being in 1 million new immigrants over the next 3 years along with a new national housing program to help with the housing availability crisis which will heat up demand and prices for Toronto apartment rentals.

So while the Ontario and Federal governments play a dangerous game of economic Russian roulette and await their political fate, homebuyers may be finding their homownership dream more distant than ever. It’s certainly not a good time for the homeless in Toront and area with the wicked cold snap coming through.

Will it be crash and burn in Toronto this year? Even the slightest economic slide in Canada could send nasty shockwaves through the housing market. Crashes normally happen after the euphoria period. Despite the government’s negativity toward home development and supply, the market should be good for 2018.

You can view the prices for each city and MLS district below.

TD Bank senior economist Michael Dolega is quoted last month as saying the market looks good “after some near-term weakness, likely to last into mid-2018, activity should begin to rebound thereafter given the fundamentally supported demand related to strong job growth and strengthening wage dynamics.”

The upcoming mortgage changes in January means buyers are putting rush orders in now. Condos below $500k are selling well and will continue to do in 2018. The key for Realtors is helping buyers find an affordable condo, or a house with rental income potential.

What is the most notable change? It would have to be Toronto condos. Sales dropped by 15% yet condo prices rose by 23% across the GTA. When the selection of lower priced condos are gone, we’ll see a renewed surge in prices as buyers hunt the luxury market to see what they can get.

Rental prices are skyrocketing as rental apartments dry up because of the rental price controls. Rents were up 12% more in the 3rd quarter. How much further will Toronto condos climb in price and how long will voters, many of whom are home buyering milennials with nowhere to go, tolerate Wynne and Trudeau?

Are you considering using a HELOC to do a house renovation? With listings up, you’ll have to have to add some value to get your house sold. An educated Realtor might be a wise hire too.

Bookmark this page as it is updated very frequently.

Normally Toronto house prices slide back during the winter. That could help solve the afforable housing issue. Yet the market is 2 tiered – young buyers with limited financing and a rising group of detached houses that are well out of their reach. 2018 should be the year of the condo. Contrast the Toronto market with the Calgary Housing Forecast for greater investment insight.

Some recent reports from Toronto realtors have it that buyers are back in the market this fall, yet there aren’t enough listings. They feel Toronto House prices will rise again. However, buyers are probably gleeful at the drop in house prices over the last 5 months. If it continues, they might be able to find a great buy. The Toronto economy could boom for sometime if NAFTA is unaffected, yet CMHC beleives there are dangers lurking for this market.

New sales data from TREB’s Marketwatch report paints a telling story of what happened in Toronto Real Estate in the summer of 2017 and how 2018/2019 might look. Buyers and sellers are wondering if the Toronto housing picture will mirror the Vancouver real estate forecast where Vancouver condos are king. Vancouver seems to have held its own which means the Toronto market might be safe too. Let’s not kid ourselves. A crash or a housing slide in Toronto remains a possibility (government).

Consider this your most up to date report on the Toronto Real Estate Market – lots of food for thought below. Enjoy the monthly price charts below which may help you decide whether it’s time to sell your house. Also see the Mississauga real estate forecast if you’re out in Mississauga, Milton, Oakville or Brampton.

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New Fed mortgage rules and a higher mortgage rate means buyers will need more money down and be forced to pay higher mortgage payments. The OECD and the World Bank are constantly nattering about Canada’s housing issues. What are they seeing that we don’t?

Most experts are calling for flat prices right through 2018, however there is still a lot of unsold new home inventory and governments are clear in their intent to suppress the housing market. Those considering putting up their houses for sale might be acting much sooner.

When Will You Put up your House for Sale?

Before it was all about finding a house for sale, and now there’s lots of houses for sale. It’s almost certain you’re going to get a much lower price for your GTA house in the next 4 months. As mentioned, the PCs will reconsider how the Liberal’s botched the housing crisis and how they might fix it.

That will change the market psychology. As soon as you and other buyers have somehwere to go, you’ll be putting your home up for sale. If you get prepared this winter and spring, you might hit it right before your neighbors sell theirs.

The Toronto situation seems to mirror the US housing forecast only with troublesome government meddling in TO. Experts suggest it is government action that causes the markets to suddenly slide out of control.

New MLS stats from TREB show sales in August dropped 34.8% year over year and the number of new listings on TREB’s MLS® System, at 11,523 which is 6.7 % lower than last year at his time. This is the fewest listings since 2010. Prices did decline yet are still higher than August of 2016, and did not decrease evenly in all TREB districts.

While some areas such as the 905 have seen big drops, (houses are sitting and have to be rented now) areas in Toronto have maintained prices. These neighbourhoods offer a more reliable bet for sustainable property investment value. Many property investors have discovered the hard way, what the word sustainable means in bottom line dollar terms. Because of demand, two hot areas right now are rental property investment and student housing investment.

Adding to the story this month is a higher loonie, higher mortgage rates, foreign buyer withdrawal, new tax on vacant homes, and homebuyers losing interest. And in response, homeowners make a desperate attempt to sell at lower home prices.

Condos were the Hot Story in Summer 2017

condo average price up over half a million dollars

condo prices have risen 28% from second quarter of 2016

average condo price in Toronto rose to $566,000

condo sales volume dropped 8%

number of new listings grew only 1%

condos in C09 district rose to an average selling price of $1.345 million

Condos in C08 and C01 have the highest volume of unit sales and an average price of $603,000 and $627,000 respectively — high volume translates to more availability and lower prices

The Best Toronto Neighbouhoods are Sound for Investment

TREB stats show specific districts or neighbourhoods in Toronto have not seen a price decline and these ones below have seen price increases:

Many of these Toronto neighbourhoods are in such strategic locations for employment, that given the housing shortage, urban intensification, poor transit and roadways, that the condos and homes in them will never see a significant price drop. The events of the last 3 months with the Liberal’s fair housing act was an acid test. These Toronto neighbourhoods look to be the best neighbourhoods for safe real estate investment.

US investors should continue to follow the Toronto real estate market as the low Canadian dollar continues to create better real estate investment value.

The Toronto Condo market in July on the other hand is active likely due to affordability. Condos are selling well at 2% to 6% over asking price and comprised 91% of all sales. New apartment and stacked townhouse sales grew 89% year over year, compared to a 72% drop in house sales.

I suspect 2018 will bring moderation given the rhetoric around the NAFTA deal, tighter lending rules, higher loonie, and very high home prices.

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Almost everyone is interested in the direction of the housing market. It affects the GTA economy, jobs and business oulook. This page is updated frequently.

A Look Back at 6 Months ago: TREB June 2017 Real Estate Report

Highlights from the June TREB market report at the end of the bubble:

Sales dropped 37% year over year, on top of May’s whopping 50% dive

residential listings were up 16%

Prices rose 6.3%

The MLS® HPI composite benchmark price up by 25.3% on a year-over-year basis in June

Home prices are down 1.1% month to month

apartment prices rose 1% month to month (higher rents)

What’s Compelling about the Toronto Housing Market?

Toronto is a high value housing market similar to New York City or the Bay Area of California, and TO is a city destined to be a super city. It’s unlikely that a property purchase in Toronto will be a disappointment over the long run. If you see the Toronto home price charts, you’ll notice that prices have climbed in the last 18 months. So buyers have not lost their equity.

And detached house prices will rise much further due to a severe housing shortage, improving economy, and rising population.

While many buyers would like to live in Central Toronto, Oakville and Milton the prices in these cities is prohibitive. Instead, buyers are looking north to Vaughan, Newmarket, Aurora, Bradford, Barrie, Innisfil, and East Gwillimbury.

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Toronto MLS Real Estate Board Sales Stats for December

Average Price – Detached Homes TREB – December 2017

City

December 2017

November 2017

October 2017

September 2017

August 2017

July 2017

May 2017

April 2016

Price Change Last 18 months

Price Change Last 8 Months

Burlington

$959,071

$871,879

$895,457

$974,446

$944,564

$921,434

$1,083,144

$961,502

-0.3%

-11.5%

Halton Hills

$820,904

$790,683

$787,517

$706,500

$984,812

$819,770

$825,058

$828,719

-0.9%

-0.5%

Milton

$843,688

$841,998

$884,144

$853,790

$866,650

$875,123

$932,899

$765,973

10.1%

-9.6%

Oakville

$1,356,888

$1,438,656

$1,482,620

$1,393,860

$1,314,363

$1,368,523

$1,561,514

$1,191,503

13.9%

-13.1%

Brampton

$763,814

$776,280

$775,170

$766,132

$766,831

$750,856

$871,052

$660,015

15.7%

-12.3%

Caledon

$1,185,182

$1,001,753

$952,466

$918,712

$1,028,591

$1,083,138

$1,190,527

$755,494

56.9%

-0.4%

Mississauga

$1,140,965

$1,060,211

$1,034,338

$1,023,207

$1,066,015

$1,113,952

$1,136,083

$966,467

18.1%

0.4%

Toronto West

$1,039,022

$1,016,076

$1,102,379

$1,015,711

$919,916

$1,131,637

$1,142,292

$944,422

10.0%

-9.0%

Toronto Central

$2,070,131

$2,109,070

$2,051,481

$2,302,146

$2,113,130

$2,080,982

$2,488,673

$1,983,187

4.4%

-16.8%

Toronto East

$894,290

$889,002

$931,239

$961,805

$887,620

$949,712

$991,509

$860,814

3.9%

-9.8%

Aurora

$1,033,353

$1,249,613

$1,280,888

$1,458,481

$1,144,094

$1,201,830

$1,360,696

$1,155,487

-10.6%

-24.1%

E Gwillimbury

$769,624

$763,071

$1,013,350

$895,119

$966,047

$867,833

$973,263

$764,055

0.7%

-20.9%

Georgina

$619,105

$542,792

$524,735

$600,791

$604,838

$548,543

$766,273

$548,886

12.8%

-19.2%

King

$2,129,286

$1,889,738

$1,887,696

$2,252,933

$1,768,333

$1,529,767

$1,756,387

$1,283,432

65.9%

21.2%

Markham

$1,497,330

$1,342,508

$1,468,221

$1,358,328

$1,319,860

$1,477,487

$1,580,570

$1,363,887

9.8%

-5.3%

Newmarket

$879,151

$946,465

$916,350

$895,191

$901,055

$901,720

$990,592

$841,593

4.5%

-11.2%

Richmond Hill

$1,365,373

$1,526,836

$1,345,898

$1,401,922

$1,466,884

$1,439,065

$1,584,327

$1,412,443

-3.3%

-13.8%

Vaughan

$1,245,480

$1,236,250

$1,280,906

$1,392,781

$1,348,649

$1,273,340

$1,479,774

$1,191,632

4.5%

-15.8%

Whitchurch Stouffville

$970,236

$1,058,486

$928,551

$1,159,545

$1,024,941

$1,096,864

$1,343,913

$1,048,658

-7.5%

-27.8%

Ajax

$690,333

$710,440

$684,011

$696,604

$708,185

$679,180

$814,521

$646,370

6.8%

-15.2%

Brock

$408,757

$445,829

$432,318

$513,579

$508,615

$734,896

$531,986

$419,758

-2.6%

-23.2%

Oshawa

$532,813

$524,422

$516,459

$516,904

$550,677

$508,039

$570,536

$467,981

13.9%

-6.6%

Pickering

$812,035

$840,592

$790,733

$869,546

$812,643

$810,351

$668,723

$772,399

5.1%

21.4%

Scugog

$689,250

$726,898

$614,678

$594,062

$719,375

$673,489

$673,314

$545,804

26.3%

2.4%

Uxbridge

$720,557

$771,521

$1,031,295

$957,221

$792,233

$793,853

$931,841

$798,749

-9.8%

-22.7%

Whitby

$698,110

$669,922

$695,352

$745,222

$733,811

$765,260

$804,322

$618,032

13.0%

-13.2%

Orangeville

$562,020

$575,349

$538,518

$594,636

$612,974

$566,438

$591,279

$490,825

14.5%

-4.9%

Innisfil

$561,716

$599,443

$525,685

$541,274

$549,492

$593,208

$762,901

$476,756

17.8%

-21%

Stats above courtesy of TREB Market Watch Report

A Look at Detached House Prices in Toronto’s MLS Districts

Toronto House Prices — MLS City Districts Home Price Comparison

TREB District City of Toronto

Avg Price December 2017

Avg Price November 2017

Avg Price October 2017

Avg Price Sept

Avg Price August

Average Price April 2016

Avg Price April 2017

Avg Price Mar 2017

Price Change Since March 2017

Toronto W01

$1,639,475

$1,269,500

$1,709,593

$1,652,600

$1,146,500

$1,405,442

$1,506,333

$1,543,961

6.2%

Toronto W02

$1,403,750

$1,256,500

$1,273,391

$1,280,867

$1,172,250

$1,331,780

$1,538,546

$1,381,945

1.6%

Toronto W03

$701,000

$774,021

$741,391

$771,142

$692,125

$666,904

$854,316

$829,396

-15.5%

Toronto W04

$799,973

$819,469

$840,110

$850,621

$846,775

$786,951

$1,024,908

$1,073,531

-25.5%

Toronto W05

$826,750

$800,063

$874,660

$805,031

$823,767

$749,333

$930,876

$1,073,531

-23.0%

Toronto W06

$1,010,600

$914,017

$922,286

$992,023

$797,392

$795,840

$974,420

$1,128,584

-10.5%

Toronto W07

$1,200,571

$1,086,386

$1,474,725

$1,277,336

$973,250

$1,112,233

$1,484,406

$1,352,042

-11.2%

Toronto W08

$1,317,240

$1,378,995

$1,356,671

$1,247,374

$1,161,882

$1,204,013

$1,544,869

$1,610,163

-18.2%

Toronto W09

$1,005,500

$886,872

$975,778

$922,000

$1,139,211

$839,479

$1,197,627

$1,115,970

-9.9%

Toronto W10

$717,539

$691,261

$688,011

$661,357

$665,268

$613,488

$831,579

$802,909

-10.6%

Toronto C01

$1,412,000

$1,597,750

$1,393,875

$1,430,667

$1,005,000

$1,528,085

$1,646,240

$1,694,333

-16.7%

Toronto C02

$3,730,000

$2,109,010

$2,313,611

$2,242,400

$2,242,750

$1,580,181

$2,710,038

$2,170,853

71.8%

Toronto C03

$1,374,437

$2,327,333

$1,880,584

$1,742,200

$1,317,111

$1,761,787

$2,246,734

$2,473,608

-44.4%

Toronto C04

$2,237,414

$2,204,173

$2,220,546

$2,212,838

$2,200,398

$2,033,140

$2,583,667

$2,245,813

-0.4%

Toronto C06

$1,147,545

$1,293,688

$1,243,727

$1,327,467

$1,445,556

$1,318,750

$1,625,779

$1,811,183

-36.6%

Toronto C07

$1,693,958

$1,609,066

$1,741,987

$1,903,632

$1,776,771

$1,657,822

$2,004,585

$2,155,365

-21.4%

Toronto C09

$2,410,000

$3,538,371

$3,414,450

$2,916,750

$3,500,000

$2,998,401

$3,246,445

$4,481,000

-46.2%

Toronto C10

$2,375,000

$1,856,406

$1,807,154

$1,747,079

$1,473,125

$1,864,333

$1,945,104

$1,786,091

33.0%

Toronto C11

$1,807,500

$2,344,375

$1,895,636

$2,137,000

$1,547,000

$1,542,867

$2,275,117

$2,201,462

-17.9%

Toronto C12

$4,213,580

$3,729,125

$3,775,636

$5,160,518

$3,910,000

$3,141,244

$3,969,281

$4,420,370

-4.7%

Toronto C13

$2,002,400

$1,342,464

$1,520,151

$2,110,709

$1,788,465

$1,926,266

$2,606,111

$2,108,137

-5.0%

Toronto C14

$1,802,222

$2,235,856

$2,001,750

$2,249,879

$3,055,823

$1,996,137

$2,554,047

$2,673,112

-32.6%

Toronto C15

$1,915,292

$1,587,250

$1,944,667

$1,832,921

$1,602,033

$1,766,219

$2,144,120

$2,108,137

-9.1%

Toronto E01

$1,319,250

$1,102,667

$1,135,156

$1,196,542

$1,224,440

$1,164,343

$1,747,894

$1,206,359

9.4%

Toronto E02

$1,188,324

$1,457,515

$1,494,639

$1,625,074

$1,414,357

$1,333,475

$1,458,167

$1,507,090

-21.2%

Toronto E03

$1,008,987

$913,430

$1,023,487

$1,038,377

$956,448

$947,611

$1,099,537

$1,121,847

-10.1%

Toronto E04

$765,124

$777,377

$768,002

$794,523

$772,883

$717,890

$897,304

$889,018

-13.9%

Toronto E05

$929,943

$899,419

$1,019,362

$979,800

$995,190

$991,136

$1,249,824

$1,303,892

-28.7%

Toronto E06

$855,347

$822,917

$766,159

$926,615

$841,995

$766,782

$1,051,918

$1,102,286

-22.4%

Toronto E07

$888,969

$911,018

$897,653

$1,025,444

$922,600

$874,280

$1,164,819

$1,142,611

-22.2%

Toronto E08

$969,634

$930,974

$1,014,526

$852,070

$872,641

$810,560

$1,066,868

$1,092,667

-11.3%

Toronto E09

$752,919

$714,451

$739,871

$690,382

$699,646

$664,378

$855,363

$895,417

-15.9%

Toronto E10

$882,733

$821,381

$897,856

$944,666

$883,852

$821,126

$1,067,925

$1,069,906

-17.5%

Toronto E11

$666,136

794,238

$758,288

$778,100

$780,618

$720,672

$842,414

$851,750

-21.8%

Huge new housing developments in Bradford, Newmarket, Aurora, and Vaughan are still selling well, but the market in the 905 area code has cooled. That means bargains are waiting.

TREB forecasted another strong year for home sales via the MLS®. Their outlook for the Toronto region was 100,000+ home sales for the third consecutive year. Between 104,500 and 115,500 home sales are expected in 2017, with a point forecast of 110,000. TREB’s districts include Mississauga, Oakville, Vaughan, Newmarket, Aurora, Richmond Hill, Markham Bradford, Scarborough, Brampton, Oshawa and Milton.

But what drives the Toronto housing market? Will it succumb to the same fate as Vancouver or worse? If you’re a buyer, you’re wondering which neighbourhoods and towns to focus on and whether this market will tank. If you’re a seller, you’re wondering if you’re going to miss the biggest payday of your life by not selling. If you’re close to retirement, you may want to carefully review your choice not to sell. 2017 is a grand time for you to sell and move onto a better life.

And from this telling graphic above, the shocking rise and fall of detached home prices tells us something is wrong with the Toronto real estate market. Could a Toronto housing crash occur? The renegotiation of the NAFTA deal may be the factor that starts the slide. President Trump’s goal is US jobs and economic health and he’s already stated he wants a better deal with Canada. It makes sense that he would want auto makers and parts manufacturing to be done in the US. The Canadian dairy and lumber industries are just a distraction.

What do your realtor and local politicians say is happening in your local market in Toronto, Mississauga, Vaughan, Oakville, and York Region? What’s their forecast? I’d like to know.

As we progress to 2018, emotions are going to run high as the critical factors you can read about below become intense. Could the Toronto economy collapse if home prices fall 20% (loss of taxes for governments among other fallout).

Below is an updated look at the March real estate market in the GTA. Recent trends show home prices are rising faster than any experts predicted. Will this be the excuse the government is looking for to upend the market? Or is demand for single detached homes simply too strong?

Government Values at Odds with the People and their Pocketbooks

Are the all too predictable actions of governments in Vancouver and Toronto foretelling what may happen in US markets such as Los Angeles, New York, Miami, and San Francisco? Is the battle over and treatment of land in all major urban areas simply an artificial means of inflating real estate prices or is there actually a land crisis?

If the Ontario government decreases available land for development, drives prices way up causing public furor thereby requiring draconian measures, will it end in a crash in late 2017? Will someone create a crisis to force a crash? We should be asking these questions if we’re investing or buying.

Scarcity of land is the primary driver of high prices in the Toronto real estate market. The biggest threat is unwise government manipulation.

BMO’s senior economist Benjamin Tal said in a Toronto Star report on October 14th, the Ontario Government’s Places to Grow program was primarily responsible for the fast rising prices in the GTA market. He also suggests other red tape factors worsened the situation. Prices in Newmarket, Markham, Mississauga, Richmond Hill, Bradford East Gwillimbury and Aurora have definitly crashed.

If land scarcity is driving prices up, then even a 15% foreign buyers tax and new mortgage rules for millennial buyers may not be enough to cool demand for housing or condos. The real factor may be the next recession, fueled by housing market mismanagement.

Please send this blog post onto your friends and neighbours because they should know as much about the Toronto area forecast factors as possible before they buy or sell. It’s good to be helpful. Mistakes are painful.

March 2017 Price Index from Teranet – Index climbed right into August. October reports coming soon. Screenshot courtesy of housepriceindex.com.

What are the Causes of High Home Prices in Toronto?

The major factors that drive housing demand growth to Toronto: immigrant investors, better economy, low interest rates, increasing numbers of buyers in their home home buying years (millennials), and optimism all look on the upswing. As mentioned in the Los Angeles Real Estate forecast post, here are the key factors that affect home prices:

Taxes – rising quickly due to Ontario government and federal government spending

Buyer Income – moderate and not rising much

Home or Condo Prices – High and rising fast – out of reach for most buyers

Demographics – Millennials coming into family and home buying years and must begin to acquire their own living space

Number of Renters – increasing fast because of tight mortgage lending rules

New Home Construction: limited because of Green Spaces Act, but is a source of supply

Economic-Foreign Trade – Canada struggling and Free Trade agreements now being scrutinized because they don’t see to be working like they used to

Taxes on Sale of Home – huge tax burden for those selling in the city of Toronto

Some point to the Ontario government’s Places to Grow intensification plan as the major culprit in skyrocketing single detached home prices. Toronto condo prices haven’t risen like house prices have, yet condo demand is usually not spoken much about. It does look like a growing population want house to live in. A growing millennial family would certainly find it tough to live in highrise condos designed for adult living.

Share this post with your friends and clients. Everyone should know about the housing crisis factors and the economic spinoff from the Toronto Real Estate Market. It’s good and bad, but they should know the factors and help in the solution.

News posts in the Financial Post, Toronto Star, Globe & Mail, CTV, CBC etc, is often based on varied expert opinions and a few isolated market factors. Why don’t we look at all the factors that comprise a realistic Toronto housing market outlook for 2017.

What are the Trends in Toronto Real Estate and New Housing?

The only drop in Toronto home prices took place in 2008, in lieu of the great recession. Graphic courtesy of the Financial Post

I’ve heard a number of convincing arguments for both a bubble and an extended period of growth in new housing development and resale housing price growth in Toronto. And I’ve heard before that money from China has no effect on the market, and from others, that today’s real estate market is driven by Chinese money. The banks and CREA just can’t get their stories straight and the media doesn’t report on how badly their forecasts were off the mark in previous years.

Was it All Driven by Chinese Buyers?

Fully 10% of new condominiums being built in central Toronto were going to foreign buyers, according to a survey released in April by the Canada Mortgage and Housing Corporation (CMHC); veterans of the city’s rough-and-tumble real estate market believe the vast majority are mainland Chinese investors 10% doesn’t seem like a big number and we’re told that Chinese buyers are only interested in luxury priced properties.

TREB’s own survey found that foreign buyers actually had little effect on the market, and it was the chilling effect of the fair housing act that destroyed what was a health Toronto real estate market.

Graphic and data courtesy of CMHC

Strangely, CREA is forecasting a marked slowdown in housing start for 2017 to a flat market for Toronto, Mississauga and Vancouver. But they admit the market is still very intense. In fact, in my town, sold over-asking price stickers are on almost every sold sign. There’s not just a few bids on these homes, sometimes there are a lot. It would take a serious economic recession or government action to get rid of all those buyers. Given how troubled our economy still is, in Ontario, it’s unlikely any government would push it into recession.

If you can sell a new house for $600,000 or a Condo for $300,000, why wouldn’t developers be building as many as they can? With economic factors supporting growth, the problem must be political. A quick look at Ontario’s urban intensification plan might show us where the real core of the housing availability crisis and fueling high rent and housing prices.

In a low oil price world, the Toronto and Vancouver economies have benefited and that has to be the key factor. And we haven’t benefited much because manufacturing jobs didn’t come back. In fact, even with the low loonie, jobs still moved to Mexico and China.

Expert Asks; Can You Believe Anything from Anyone Anymore?

We were told by the experts that the boom is only being experienced in Vancouver and Toronto, but the graph below tells a different story. If the US economy picks up, we could see all Canadian cities heating up.

The Usual Suspects? Government

The upcoming jump in downpayment for mortgages will only hurt first time buyers who will still have to rent a condo or home somewhere, if they can afford it. There’s word the BC government may levy taxes against unoccupied homes and they’ve talked about harassing investors (background checks). Of course, BC just levied the 15% foreign buyer tax and caught many unwary buyers offguard, resulting in extra costs of over $100,000 for some. That’s what happens when government starts meddling in markets – they don’t work anymore.

Ontario’s Urban Intensification Act appears to be colliding head on with the Greenbelt expansion plans by intensifying growth near the greenbelt areas and at the same time shrinking available land. Is this a wise move at a time of fragile yet positive economic growth?

Houses for Sale in the Sizzling Hot GTA Market

Housing markets such as Vaughan, York Region, and Central Toronto heated up considerably in 2017 and more people moving to these municipalities. No one looked at Aurora real estate in past years, but new housing developments, great lifestyle, along with a very limited supply of land within the town means speculators will be jumping on the bandwagon. Days on market for Aurora homes was down to 10 last spring — only Oshawa homes sold that fast, and for over asking price.

Homebuyers are willing to look beyond the green spaces belt, but they’ll look at Aurora, Bradford, Stouffville, and Newmarket first before heading north. The pressure from Toronto, Chinese, and Mississauga buyers should put much upward pressure on these regions.

14 Comments

John

What a disaster we Canadians have got ourselves into. Is real estate what we do as an economy now? Do what it takes to make your retirement buck now & who cares about the next 30 years of up and coming generations.

The market should have corrected years ago but because of poor polices and virtually free money we are in a situation where, when it crashes the entire economy will go with it. So much laziness and greed has been applied to the Canadian real estate market I can help but think we deserve everything that’s coming our way.

Larry

The simple fact is that house prices are rising much faster than incomes. Houses will become unaffordable to many Canadians. US interest rates are on a slow path upwards and Canadian rates will eventually follow. Toronto is in a bubble but the real question is whether we will see an orderly slow decline in prices or more like a crash.

Gord Collins

Larry, my view is that prices will keep rising fast, with insufficient new housing stock, and indebted Millennial first time buyers will be over-leveraged as they buy the cheaper homes. And they may not really be able to afford them. It’ll be one thing that will start the landslide, perhaps foreign money leaving that does it.

Excellent collection of insights. Thank you Gord. We had our second child in Jan. and Toronto may not work for us anymore.
– Are you aware of a ranked list of cities by cost of housing, not cost of living.
– Curious how Toronto stacks against US cities per ft2 selling price
– Most indexes I find take total cost of living into account and use apartment rental rates
– I just saw one that ranks Toronto 23rd most expensive city in N.A, seems way too low given the bubble.

Gord Collins

Thank you Dan. Congrats on the new member of the family. Yes, so many people are facing the decision to leave the GTA entirely. Might be agonizing at first, but it might be better for your kids. With the Internet, they won’t miss much. What do you think of Calgary? Buy low and and wait for oil to come back? Isn’t that how big fortunes are made? I don’t know of any such lists but perhaps I should make one:). What’s the first place that comes to mind when you think about moving?

[…] From banking to clothing to hailing cabs to finding auto parts, they’re using their smartphones or laptops to buy, interact, and stay informed. They would do everything online if they could including buying real estate or mortgages. […]

Parastoo Roshany

Gord Collins

My guess is we’ll see a continued decline overall this fall with the luxury market seeing a bigger drop. The liberal’s vacant home tax would be pathetic, just a psychological tactic to scare away Asian buyers. The overall Canadian market isn’t strong which indicates the economy isn’t great. The Toronto market has a lot of downward momentum that could continue right through to spring. Vancouver has bounced back from government meddling so maybe by spring Toronto can do it too. Can Toronto continue to be isolated from the Canadian economy? The NAFTA deal is what could send the Toronto Housing Market and the economy crashing. Overall, homeowners would be wise to sell because prices are high and availability limited. Why wait for lower prices in 6 months?

Gord Collins

Hi Lavanya. Some believe the sky over Toronto will fall in 2018, but with rentals disappearing, it’s safe to say rental income property owners will get their price. Prices won’t go down, and may actually boom if the economy takes off in 2018. Buying a rental income property, living in the upper floor and getting tenants to help with the mortgage is just plain smart. That helps with the housing crisis as well! Good luck with your rental property.

Kesh

Hi Gord, Thanks for sharing your insights on the market.
I’m a first time buyer and i’m exploring to purchase a condo in downtown Toronto. A one decent 550sqft condo sells for about 450k (which i find absurd). Would you advise waiting till mid 2018, with the new stress test rules, in hopes that the prices will decrease? I can’t justify paying so much, but at the same time the prices seem to be going up every month.
Thanks!

Gord Collins

Hi Kesh. You’re welcome. I can’t advise you however if you check the Toronto condo market during February, you’re giving the market time to bottom out. Anything under $500k will in extreme demand because of the stress test rules. $900 a square foot is scary, especially for a 1 bedroom. However, immigration is rising fast, there’s not much inventory, and there is a lot of reason to consider the possibility of a housing boom rather than a housing crash. The government doesn’t want to sincerely increase supply, so they’re going to try to kill demand. That’s where they run the risk of killing an economy that’s still dependent on real estate. But Millennials need somewhere to live as do all these new immigrants. The question you should consider before buying is will Trudeau and Wynne get routed out of office before they create a recession? Are you investing or do you need to live in the unit?

sadaf khan

Hi Gord. Thanks for this informative piece. Its best info I’ve found on the net. I plan to invest in a $250K – $300K property in Ontario without living in it as I am in UAE. Which town of Ontario do you suggest I should invest in to keep my rental income coming, along with chance of property appreciation. Toronto is surely very expensive now so we are think about these towns: Oshawa, Guelp, berries or Milton…what would you do if you had this much of savings and wanted to invest in Ontario Market for 2 years

Hi Sadaf, Thanks and as you saw, the economy is fairly strong so towns well outside the GTA might be the best bet for a 2 year time frame. Check out Orillia. This is a town that never took off which is a shame because it’s right on the highway and Lake Couchiching, close to cottage country, and prices are low. They’ve remodeled the town park waterfront and it still has a nice small town feel. Here’s an example:https://www.royallepage.ca/en/property/ontario/orillia/120-dunlop-street/7142115/mls30615008/ of a house near the town. $300k is about as low as you’ll get. The Orillia housing market could take off as “stress tested out” homebuyers get desperate for an affordable home to buy further out from the GTA.